Affiliate marketing has become increasingly popular in recent years and more and more online marketers are relying on the supposedly lucrative recommendation business. Since it is often called a passive income opportunity and you do not need your own product for it, more and more people are interested in this business model in the course of digitization.
Also on YouTube there are some gurus who report how Affiliate Marketing has changed their lives due to the monetary success.
But What Is Really Behind Affiliate Marketing?
We provide an objective insight into the topic of affiliate marketing and explain the possibilities and risks. There is also a step-by-step guide on how to become an affiliate marketer and earn money with your business model. We also present you some Starter Tipps the best providers, networks, partners and programs.
Definition - What Is Affiliate Marketing?
Affiliate marketing, also known as recommendation marketing, is a type of distribution in which companies (merchant / provider) enter into a business relationship with sales partners (affiliates). The sales partners advertise the products of the provider and receive a commission per lead / sale depending on the agreement. The sales partner thus acts as an intermediary or interface between the customer and the merchant.
The merchant usually provides a specially generated link with tracking code. Thus it can be tracked exactly which leads / sales come from which affiliate. Based on this, corresponding commissions are paid out. These are very different and depend on the provider or are usually chosen by him.
Merchants often provide advertising material such as photos, videos or dynamic banners to support advertising.
In addition, tracking is supported by cookies over a longer period of time. Depending on the merchant, commissions are also paid a few days, weeks or months after the link was clicked (if a purchase / lead was made).
Basically, both sides profit from each other and can concentrate on the respective area of competence and thereby enter into a mutually profitable business relationship. The manufacturers can concentrate primarily on product development, customer support etc. while the affiliates only have to concentrate on marketing and can leave the rest out.
Affiliate Marketing Overview
Since it often comes to unrealistic promises on the part of many Affiliate Marketing Gurus or course sellers we give here an objective overview of the advantages & disadvantages of Affiliate Marketing.
Often the advantages are exaggerated and the disadvantages left out and an unrealistic picture is created. However, especially at the beginning of entrepreneurship, an objective and realistic assessment of the business model is important.
Affiliate marketing has not become so popular for nothing in recent years if it does not bring some benefits with it. Here are the most important at a glance.
The first advantage refers to the low start-up costs. It is theoretically even possible to start with 0€ starting capital. Because one needs no on-line Shop (market place), no products, no fees result and one needs also no personnel to pay. Most Merchants (99%) have free Affiliate programs. Thus one can refer the left without costs and earn theoretically already the first commissions without own investment. This aspect is especially important for young people. After all one can begin without large financial risk.
With it the next point goes along and this is the small entrance barrier. Not only from monetary/financial but also from legal, temporal and social view the entrance is nearly barrier-free in the Affiliate marketing. Theoreticallyeveryone can start with Affiliate Marketing. Also pupils, students or already working persons can begin with it.
A further advantage is the location independence of the business model. Affiliate marketing can be operated from anywhere in the world as long as you have a stable Internet connection. No fixed office, sales or storage space is necessary.
In addition, there are no limits to scalability or financial possibilities. Since it is a virtual business and there are almost no limits with regard to traffic / customers and affiliate partners, the business model can be scaled very well. With other business models such as Dropshipping with Shopify, Amazon FBA or similar, the effort increases strongly and the scaling requires more know-how and at the beginning usually also more time commitment.
Last but not least, affiliate marketing is a very low-risk business model due to the low entry barrier and the monetary expenditure. The possibilities are very great and the loss in a total failure extremely small. Only the at least business model can claim this.
On the other hand, there are also disadvantages in affiliate marketing. These are often concealed by “gurus” but should definitely be noted. There are no K.O. factors and compared to other online marketing business models very small but should still be considered. An objective consideration is always necessary when starting a new (online) business.
The disadvantage of Affiliate Marketing is the strong dependence on the merchant. If this bankruptcy goes or the commissions shortened one can do nothing against it. All product related problems or aspects depend strongly on the manufacturer. For the quality, delivery and customer satisfaction there is no guarantee and one has also no influence on it. So if you advertise products which are bad or do not meet your expectations, this has an indirect negative effect on yourself.
Beyond that one has no insight how fair and honest the tracking of the generated linkclicks and/or Leads developed from it runs. Through (https://bitly.com/) one can determine how many clicks take place but the final conversion measurement lies with the merchant. Even if it is extremely rare that he cheats on his affiliates is not to be excluded and also difficult to determine.
Affiliate Marketing Launch - 5 Steps Guide
There are many ways to do affiliate marketing. Here are the 5 most important steps in a short overview which are necessary to be successful with Affiliate Marketing. These are always necessary no matter what kind of affiliate marketing you do. You should also do them in this order to save unnecessary mistakes, time and money.
1. Select Your Nice
The riches or in the niches. This sentence is definitely true, because there is often more money in the niches than you might think in the beginning. Just like any other big company or brand you should treat an affiliate marketing project the same way and choose a niche or a niche market. In addition, the target group as well as the current market in this niche should be analyzed, defined and ideally tested.
Define Target Group / Interests
Beginners often make the mistake of positioning themselves too broadlyfor fear they wouldn’t find enough potential buyers. The first step is how to approach or define a niche. Here is an example.
- Health > Sports > Weight training > Bodybuilding > Natural Bodybuilding
You can imagine the whole thing like a funnel. At the top is the broad mass of people. In this example, health is (affects and interests almost everyone to a certain degree). However, this would be too broad and not clearly defined enough. The further you go down the funnel, however, the more clearly the target group is positioned. Here is another example.
- Technics > IT > Computers > Apple > iMac, Macbook & iPads
Even if many people are interested in technology, this is still too broad because the target group can be very different. There is technology ranging from cars to construction technology to IT. The target groups are correspondingly different. However, if you follow the funnel further down, the target group is defined more precisely and better again. Until you get the ideal target group.
Analyze Search Volume & Competition
Of course there is also a lower limit and this starts when the target group is so limited that there are hardly any people left who fit into it. Ideally you should be in the golden mean and with time (or you already know the niche very well) you get a feeling for how “nischig” you can become and where this golden mean is.
It is the golden mean from too weakly defined with too high competition and too strictly defined with little competition and too small target group. Exactly in the middle there is usually the “sweet spot” with which one is most profitable.
Of course you don’t have to guess blindly but you should indicate the whole thing based on data. Fortunately, there are already some tools and software that make this possible. These tools give insight into search volumes, competition as well as future development and trends. We use the following:
- Google Keyword Planner (Free)
- AHREFs (Paid)
- Ubersuggest (Free)
- Google Trends (Free)
- KWFinder (Now Paid!)
Especially at the beginning it is important to act based on data and to choose the appropriate niche to create a solid basis which makes sense in the long run.
2. Find Products
The second step after analysing the target group or the target market is to find the products or monetization possibilities. Even if a niche is very interesting (target group large enough but little competition) and is considered, this does not mean that it is profitable. It is the basic prerequisite but the second step is just as essential.
Basically there are two main categories of products:
- Physical products (for example, supplements)
- Digital products (e.g. courses, trainings, software, tools etc.)
Products of these groups can be offered to monetize the affiliate project. However, one should know that digital products are always more profitableand usually give a better commission than physical products. This is due to the low production costs and easy scalability on the part of the merchants.
Because if there are no products which you can advertise or which do not fit exactly to the target group you will not have any monetary success with it. After all, the whole project should also yield a profit. Later, we will present the best “contributors, networks and programs” that can be searched for products.
3. Choose Platform
As soon as you have found the right target group and suitable products, you have to choose a platform. This usually depends on the target group, because each platform has its own demographic orientation. This is why it is so important to select the target group with the corresponding productsfirst and then the platform.
For example, a younger female target group will be more likely to be on Instagram, Youtube and Pinterest than on a normal website. Older people (>40 years) who are still mostly on the go on websites and blogs are different. Every platform and every social network has its own demographics and you should be aware of this before you specialize in one or two at the beginning.
Here is a brief overview and then a detailed overview of the most important platforms:
4. Generate Traffic
Once the target group has been defined, products have been found and a platform has been chosen, you naturally have to generate traffic and win customers.
There are two possible approaches for this:
- Organic Traffic (Through Content
- Marketing & SEO)
Paid Traffic (By Paid Ads)
This step is just as essential because even if the preparatory work has been done and good products are available, of course you also need customers for it. Here is a comparison of both variants.
Organic traffic is usually generated by content marketing in conjunction with SEO. By creating high-quality content (which is logically tailored to the target group) on a regular basis, you will attract the appropriate target group.
- Blog Article
- Instagram Postings
- YouTube Videos
- Pinterest Graphics
All this falls under content marketing. The goal is to provide valuable content with the corresponding added value to attract the target group.
With some technical skill and search engine optimization (SEO) you can significantly increase the reach of these contributions and grow organically. Although it is free from a financial point of view, it costs a lot of time.
Advertisements are the cost-liable variant to bring potential customers to your own site. These can be placed anywhere on the Internet but cost money accordingly. One needs not only a certain starting capital but also appropriate Know How around really profitable campaigns to switch.
The following advertising platforms are suitable very well and/or are particularly remained:
Each advertising platform is different and requires different know how so we recommend this only for advanced affiliate marketers who already have experience with it.
5. Optimization & Scaling
Even if a profitable affiliate business has already been established, there are always possibilities to optimize it.
On the one hand you can constantly work on generating more traffic and customers. This can be achieved through more and or better content. Additionally you can add Paid Advertising.
On the other hand you should also try to build up regular customers who buy again and again. Basic condition for it are naturally good products. This rule applies to online marketing of any kind. An already won customer who buys more often is in the long run much more profitable than that one must win first and buys only once. Content marketing and brandingplay an important role here. This creates trust and binds the customer to the brand or the business.
In addition, there are always opportunities to negotiate with the merchants and to negotiate better commissions. When they see that high quality leads and sales are generated, they are willing to pay more than originally agreed.